While Bharti Airtel is looking at multiple modes to raise funds, sources told CNBC-TV18 that financial investors and PE players have also expressed interest in investing in the company.

Bharti Airtel is in the process of undergoing one of its largest fundraising drives to date. To that effect, the board last week cleared fundraising of up to $3 billion via debt-equity.

The names that are interested include marquee investors like Warburg Pincus and Carlyle, according to the sources.

“Warburg Pincus has had a long association with Airtel and is confident of the long-term story. While talks are at a very exploratory stage right now, Warburg is keen on the deal. Other PE players have also sounded of Airtel’s investment bankers on their interest in the deal,” said a source aware of the talks.

The sources added that Singapore Telecommunications (SingTel ), which currently holds 35 percent in Bharti Airtel, directly and indirectly, is exploring investing anywhere between $700 million to $1 billion in the telecom major.

“The quantum of investment is yet to be decided. The board of SingTel will be meeting soon to finalise,” added another source involved in the transaction.

Airtel’s board approved raising $2 billion via the launch of one or more QIPs or OFS or a combination of both and $1 billion via debentures and bonds. It has authorised a Special Committee of Directors for taking necessary steps for implementing the fundraising plans.

The company will use the proceeds to pay liabilities to the Department of Telecom (DOT), bring down debt and to expand operations and upgrade network infrastructure to prepare for 5G auctions and launch next year. Bharti Airtel’s last reported net debt stood at Rs 1.18 lakh crore.

Bharti Airtel recently announced hiking tariffs to reduce the stress on its balance sheet. It hiked tariffs from 25-40 percent on an average and up to 40 percent on some of its lower plans. The company, along with COAI and other telecom operators, has been stressing on the need for relief from the government to alleviate the stress in the balance sheet.

Not only do most telecom operators have a high debt burden, but they also need capital for network expansion and to be able to participate in the upcoming 5G auctions.

The government recently announced a 2-year moratorium on spectrum payments. COAI and telecom operators have stressed on the spectrum relief, while important, not being enough to alleviate the severe stress in the sector.

Bharti Airtel’s decision to raise capital via debt and equity is a strategic initiative to remain competitive and at the same time manage its debt levels.

In the last quarterly result, Bharti Airtel reported a net loss of Rs 23,044 crore and provided Rs 28,450 crore as the charge for AGR dues.

In Oct, the Supreme Court passed a verdict allowing the Centre to recover dues from telecom operators for adjusted gross revenue (AGR). The liability on Bharti Airtel from the AGR verdict is at Rs 43,000 crore. The move is a massive blow for the incumbent players, especially Bharti Airtel and Vodafone Idea. A heady cocktail of troubles will lead to these players needing to raise capital via multiple modes to stay relevant and competitive.

First Published:Dec 10, 2019 2:14 PM IST